Masonry Magazine October 1970 Page. 21
Washington Wire
INDUSTRIAL PRODUCTION WILL CLIMB SLOWLY from a current level that is 3% below the mid-1969 peak. Barring excessive strike damage, factory output could be back to the peak in the third quarter of 1971. It would then move up another 1½% to 2% in the October-December period, to an all-time high.
Private housing starts, expected to be the brightest spot in the economy next year, seem headed for a 20% jump. Builders will be beginning work on new home units at a 1.5 million-a-year rate this quarter. The tempo will rise to perhaps 1.7 million a year from now. For all 1971, the total begun could jump to 1,650,000, the highest figure since 1955.
The stepped-up home-building activity is, of course, likely to be a welcome help to appliance and home furnishings sales.
DEFENSE EXPENDITURES WILL CONTINUE TO SLIP during the rest of this year and 1971. Over-all, analysts expect a year-to-year drop from 1969's $77 billion to, say, $73 billion next year. The downward tilt could well produce an annual rate of outlays of $72 billion by the last quarter of the year. That's a substantial drop from the peak of more than $80 billion.
The ebbing of thrust from this important sector-one of the generators of the late boom-will be even greater than these figures show. Deflating for price increases, the decline becomes even more dramatic the economic push even less.
UNEMPLOYMENT IS EXPECTED TO RISE A LITTLE MORE and then slip back slightly through the course of next year. Productivity-output per manhour-will be rising faster than production... meaning that some further lay-offs are likely, especially in defense work. The rate may climb to 5.2% or 5.3% of the labor force this fall and winter before falling to 4.8% by 1971's end.
Wage increases will continue large in 1971, despite the new weakness that has recently appeared in the demand for labor. The Auto Workers settlement will lead other unions to push for fat increases to offset high prices. The hourly rate in manufacturing could rise by as much as 8% or 10% in 1971.
The rise in consumer prices will continue to slow in 1971, to about 4¼%, from the 5¾% or so emerging for this year. Services keep rising steadily in price, and food is volatile. With luck, the rate of rise may fall below 4% before 1972.
CORPORATE PROFITS ARE EXPECTED TO REVERSE the substantial downturn that has depressed 1970's net by 11% to around $84 billion before taxes. Moderately improving sales, plus rising productivity, seem likely to push earnings back up to $88 or $89 billion-still short of 1969's $91 billion.
The better profit performance is expected to help the stock market recover further in 1971 from this year's slide. The Dow-Jones Industrials Average could well rise to 850 or 875.
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